Morrisons to take on discounters and get to know customers with new loyalty card

Morrisons: investing in core supermarket chain to lower prices

Morrisons: investing in core supermarket chain to lower prices

Morrisons is to take on discount retailers, Aldi and Lidl, by cutting prices and is launching a loyalty card in order to get to know its customers.

Announcing annual losses of £176m for the year to 2 February 2014, Morrisons said it is investing £1bn over the next three years in its core supermarket business to permanently lower prices and warned profits will be lower in future as a result.

The supermarket is also exiting non-core business areas and plans to sell off its Kiddicare baby retail business and the New York-based online food operation, Fresh Direct.

Morrisons said there was an opportunity in getting to know the 12m customers who shop with the supermarket chain and it is trialling a Morrisons loyalty card, which it plans to roll out before the end of the 2014/15 financial year. 

Dalton Philips, chief executive, said: “The strategy we are announcing today is a bold and comprehensive response to the fundamental structural changes that are taking place in grocery retail.   

“We are significantly reducing our cost base and will invest £1bn into our proposition over the next three years, to improve our value even further and to defend and strengthen our competitive position. Customers will see this in our stores as well as in our fast growing online and convenience offers. At the same time we will exit non-core activities, significantly reduce our capital expenditure and deliver improved operating cashflow and return on capital employed.  

“Together with the strategic value of our vertically integrated supply chain, these measures will provide a firm foundation from which to provide outstanding value to our customers and to generate meaningful shareholder returns over the medium term.

“I’m confident that Morrisons will emerge from this period of necessary change as a more focused, more distinctive value leader and well positioned to compete sustainably in the new grocery landscape.”

Morrisons said it aimed to be a multi-format, multi-channel grocer and plans to build on its unique vertically integrated manufacturing operation and focus on fresh foods. 

Alongside its investment in its core supermarket business, Morrisons plans to accelerate its presence in the online and convenience channels.

Morrisons’ online business is operating in Warwickshire and Yorkshire and will extend its offer during this year. It also plans to trial a new click and collect format.  

Convenience expansion is also on the cards in 2014/15. Morrisons plans to double its Morrisons M Local chain with 100 additional stores during the year and expects convenience sales to reach £400m.